Indian Stocks Plunge Due to Political Turmoil and Inflation Fears

India's key stock market index has fallen more than 3.5
percent because of concerns about rising inflation and political
instability.

Mumbai's Sensex index lost 500 points Tuesday to close at 12,962, its lowest in more than a year.

Indian
banks were among the hardest hit in the sell-off, including State Bank
of India, which lost 7.8 percent, and ICICI Bank, which declined 6.5
percent.

The surging price of crude oil worldwide has added to
concerns about India's inflation rate, which is at a 13-year high. In
June, the Indian government raised the price of gasoline and diesel
fuel to help state oil companies stay profitable.

Analysts say
tensions between India's ruling coalition and the communist parties
over a proposed nuclear pact with the United States also contributed to
Tuesday's stock sell-off. The communist parties have threatened to
withdraw support for the ruling coalition and force early elections if
the pact is passed.

Some information for this report was provided by AFP, AP and Bloomberg.